17
that petitioner suffered 7 years of losses up to and including
the taxable year 1990. Petitioner had no business plan to
address the accumulating and expected losses.
While it is likely that petitioner entered into the metal
mining and refining activity with a profit objective, the
extended record of losses without abatement devalued the activity
into one that provided an offset to petitioners’ other income.
2. The Expertise of the Taxpayer and His Advisers
Petitioner developed, since childhood, the technical
knowledge, skill, and interest in the metal mining and refining
field. Petitioner also observed the proprietor of Valley
Smelting, a similar concern allegedly also involved in a similar
activity. Finally, by 1980, petitioner had a competitor who was
also recovering mercury from scrap batteries. Petitioner did not
demonstrate how he utilized the information gathered to address
any business decisions confronting his activity such as the rates
of continuing losses.
Although petitioner’s wife was a controller possessing
financial skills to develop and operate a business plan, the
record does not demonstrate that her skills were utilized.
3. The Time and Effort Expended by the Taxpayer in Carrying
On the Activity
Petitioner spent a minimal amount of time carrying out the
activity in 1990. He spent approximately 1 month on the
production of income in 1990. He contends, however, that the
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011